1998 (6) TMI 265 - AT - Central Excise

Summary

Issues:
1. Modvat credit on insulated copper cables.
2. Classification of 'Insulated Copper Cables' as capital goods.
3. Reference to earlier Tribunal decisions and High Court referral.

Analysis:
1. The Collector of Central Excise filed a reference application seeking clarification on allowing Modvat credit on insulated copper cables under Rule 57Q. The issue revolved around whether the cables were used for production or processing, as required by the rule's explanation. The Tribunal had to determine if the Modvat credit was correctly granted.

2. The Appellate Tribunal considered arguments from both sides. The appellant contended that the cables were essential for running machinery and thus qualified as capital goods under Rule 57Q. They relied on the Tribunal's decision in a previous case involving Nova Udyog Ltd. The respondent, however, argued that the question was more factual than legal, emphasizing the cables' role in the main machine. They also referenced other Tribunal decisions supporting their stance.

3. The Tribunal examined the previous order and noted that the decision in Nova Udyog Ltd. was pivotal in allowing Modvat credit on wires and cables. The Tribunal's interpretation of capital goods encompassed components essential for machinery operation, including wires and cables for power transmission. The Tribunal highlighted the wider definition of capital goods and how essential components, even if not directly involved in production, could qualify for Modvat credit. The Tribunal also referenced the case of Abi Photochem Ltd. to support their decision.

4. Given the similarity of issues with the Nova Udyog case and the High Court referral in that matter, the Tribunal agreed to refer the questions raised in the current case to the High Court of Orissa for a decision. The decision was based on the relevance of the issues and the need for a higher judicial interpretation due to the precedents set by previous Tribunal decisions and the evolving understanding of capital goods under Rule 57Q.